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Colerain Corporation is a merchandising company that is preparing a budget for the third quarter of the calendar year. The company's balance sheet as of June 30 is shown below: COLERAIN CORPORATION Balance Sheet June 30 Assets Cash 86,000 Accounts receivable 132,000 Inventory 58,000 Plant and equipment, net of depreciation 260,000 Total assets $536,000 Liabilities and shareholders' Aquity Accounts payable $ 67,000 Common shares 360,000 Retained earnings 109,000 Total liabilities and shareholders' equity $ 536,000 Colerain's managers have made the following additional assumptions and estimates: Colerain's managers have made the following additional assumptions and estimates: a. Estimated sales for July August September, and October will be $230,000, $250,000, $240,000, and $260,000, respectively. b. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. c. Each month's ending inventory must equal 40% of the cost of next month's sales. The cost of goods sold is 60% of sales. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% In the month following the purchase. All of the accounts payable at June 30 will be paid in July, d. Monthly selling and administrative expenses are always $71.000. Each month, $5,000 of this total amount is depreciation expense and the remaining $66,000 relates to expenses that are paid in the month they are incurred. e. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common shares or repurchase its own shares during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30. Schedule of Expected Cash Collections July August September Quarter From accounts receivable $ 230,000 250,000 $ 240,000 $ 720,000 Sales on account July 69,000 $ 161,000 230,000 August 75.000 $ 175.000 250.000 September 72,000 72,000 Total cash collections $ 299,000 $ 486,000 $ 487,000 $ 1.272.000 2a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. Merchandise purchases budget July August September Quarter Budgeted cost of goods sold $ 138,000 $ 150,000 $144,000 $ 432.000 Add: desired ending inventory 60,000 57,600 62,400 62.400 Total needs 198.000 207,600 206,400 494,400 Less: beginning inventory 58,000 60,000 57,600 58.000 Required purchases $ 140,000 $ 147,600 $ 148,800 $ 436,400 2b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30th. Total 0 Schedule of Cash Disbursements for Purchases July August September From accounts payable $ Purchase on account July August September Total cash disbursements $ $ 0 $ 0 $ 0 0 0 0 0 3. Prepare an income statement for the quarter ended September 30. (Do not leave any empty spaces; input a O wherever it is required.) COLERAIN CORPORATION Income Statement For the Quarter Ended September 30 0 0 Administrative expenses Commissions Cost of goods sold Depreciation 4. Prepare a balance sheet as of September 30. COLERAIN CORPORATION Balance Sheet September 30 Assets Accounts receivable Cash Total assets $ 0 Liabilities and Shareholders' Equity Total liabilities and shareholders' equity $ 0